Understanding the HUD-1 Settlement Statement

What is the HUD-1 Settlement Statement?

HUD is an acronym for Housing and Urban Development.  and represents the arm of the U.S. government department responsible for legislation relating to home ownership and property development within the United States of America.

The HUD-1 form, often also referred to as a “Settlement Statement ”, a “Closing Statement ”, “Settlement Sheet ”, combination of the terms or even just “HUD ” is a document used when a borrower is lent funds to purchase real estate.

Another acronym used in relation to the HUD form is GFE. which means ‘Good Faith Estimate ’.  The ‘Good Faith Estimate’ was incorporated into the HUD form in 2010 and presents figures initially estimated by the lender in order to compare with the final HUD figures.

When is a HUD-1 Settlement Statement used?

Another term linked with the HUD is RESPA.  RESPA is an acronym for Real Estate Settlement Procedures Act and represents a set of legislative statutes relating to real estate transactions put in place by the government to enforce disclosure of charges and fees to the consumer.

According to the RESPA act, the HUD form is to be used by all lenders of loans providing funds for real estate purchases and refinances of real estate loans and must be given to the borrow at least one day prior to the date of settlement.

A settlement agent. or closing agent. will prepare a HUD-1 settlement statement at the closing of a real estate loan.  The final version will explicitly state all costs involved with the real estate loan and to whom the individual charges and fees will be paid to.  This provides the borrow and the seller with a concise breakdown of all costs involved.   Good Faith Estimate figures will typically be sent from the lender to the settlement agent within three days of application of the loan.

The settlement agent can take the form of a title agency, mortgage broker, even the bank could act as a settlement agent however it is recommended hiring an experienced real estate law firm experienced in real estate closings to take care of the closing.

What information is provided on a HUD-1 Settlement Statement?

Aside from the basic details of the involved parties, consisting of the buyer and seller, the lender, property details and settlement agent details, unsurprisingly the majority of the settlement statement consists of figures. Lots of figures.

Page One

The first page lists figures in a dual column format listing buyer details on the left and where applicable, the seller details on the right.  Details you will find on page one include;